Europe’s top court invalidated a transatlantic data transfer deal between the European Union and the United States Thursday, citing concerns about U.S. surveillance, in a decision that could impact how major tech companies like Google, Amazon, Facebook and others operate in the continent.
- The European Court of Justice ruling terminates the widely used EU-U.S. data transfer agreement known as “Privacy Shield”, effectively ending privileged access to personal data of European users for U.S. tech companies.
- Depending on how the ruling is applied, tech giants like Amazon, Facebook, Google and Apple could be forced to either shift their data centers to Europe or cut off business with the region.
- Privacy activists in Europe have long argued against ‘Privacy Shield’ contending that the U.S.’s surveillance activities should make it ineligible to store European user data.
- The Privacy Shield agreement had been set up by Washington and Brussels in 2016, in order to protect personal data of Europeans being sent to the U.S. for commercial use.
- U.S. Commerce Secretary Wilbur Ross said he was disappointed with the ruling noting that he is in touch with European leaders to limit any potential “negative consequences to the $7.1 trillion trans-Atlantic economic relationship,” the Wall Street Journal reported.
The ruling effectively means that companies looking to move European users’ data abroad will have to ensure an equivalent level of protection to the strict European data privacy laws. This could pose a challenge for large tech companies like Google, Facebook, Amazon and others who may currently process data from European users in data centers in the U.S., where similar privacy protections do not exist. Disruption in these data transfers could impact billions of dollars of trade including cloud services, and online advertising.
The case had been brought to court by Austrian lawyer and privacy activist Max Schrems, who has been pursuing cases over handling of European citizens’ data ever since Edward Snowden disclosed the NSA’s alleged surveillance activities of both foreign and U.S. nationals in 2013. Privacy Shield is a replacement for the previous “Safe Harbor” agreement between the bloc and the U.S. which had also been invalidated by the court back in 2015, following another litigation by Schrems.
“One of the biggest takeaways is that we would need fundamental reform in U.S. surveillance laws if U.S. companies still want to have any kind of decent access to the European market,” Schrems told Reuters.